North Dakota Protection & Advocacy Project

News: October, 2008

Mental Health Parity

After a 12 year battle by mental health advocates, more than one-third of all Americans will soon receive better insurance coverage for mental health treatments because of a new law that, for the first time, requires equal coverage of mental and physical illnesses.

In 1996, the drive for mental health parity was begun by U.S. Senator Pete V. Domenici, R-N.M., whose daughter has schizophrenia, and U.S. Senator Paul Wellstone, D-MN, whose brother has severe mental illness. They sought to win passage of a law that banned insurance plans from setting lower annual and lifetime spending limits for mental health treatments.

For years lawmakers and mental health advocates negotiated with health insurers, industry groups, and other lawmakers that opposed the legislation. Finally, compromise was reached. The House and Senate passed different versions of the mental health parity bill -- the Senate version was tucked into a bigger package in September 2007, while the House passed a stand-alone bill in March 2008. A joint compromise was needed before the bill could be sent to the president's desk. Progress stalled until the legislation became part of the package to aid the country’s ailing financial sector.

The final version of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was passed on October 3, 2008 in the United States House of Representatives as part of a $700 billion financial bailout, two days after the United States Senate approved the measure. President Bush quickly signed it into law.

The bill requires that any group health plan that provides both medical and surgical benefits and mental health benefits must provide mental health benefits that are comparable to those for physical ailments. It bans plans from setting lower annual and lifetime spending limits for mental health treatments or including differences in things like co-payments, deductibles and treatment limitations. Group plans offered by small businesses (50 or less employees) are exempt from the requirement.

Federal officials state the law will improve coverage for 113 million people, including 82 million in employer-sponsored plans that are not subject to state regulation. The effective date, for most health plans, will be Jan. 1, 2010.

The law comes just three months after Congress passed the Medicare Improvements for Patients and Providers Act of 2008, which eliminated discriminatory co-payments in Medicare, the program for people who are 65 and older or disabled.

Medicare beneficiaries have been paying 20 percent of the government-approved amount for most doctors’ services but 50 percent for outpatient psychotherapy and services furnished by non-physician mental health professionals (20% for prescriptions and monitoring of medications to treat mental illness). This has served as an incentive to use inpatient or institutional care instead of outpatient services. It has also led seniors and people with disabilities who rely on Medicare to forego needed mental health treatment. A co-payment for mental health care that is comparable to other services will be gradually phased in over six years and ultimately be reduced to 20 percent by 2014.